UPSC Prelims Practice Questions — Cabinet okays IDBI Bank sale to Fairfax for ₹52,878 cr.

Q1. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. Even before the 2026 sale, the RBI treated IDBI Bank as a private sector bank, although public sector entities together held more than 90% of its equity.
  2. In classifying a bank as public sector or private sector, what counts is whether the Government of India's own shareholding exceeds 50%, not the combined holding of all state-owned entities.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q2. Consider the following facts about IDBI Bank: before the 2026 transaction, the Government of India held about 45.5% and LIC about 49.2% of its equity; after the transaction, they will hold 15% and 19% respectively, while a single buyer acquires an aggregate 60.72% stake along with management control. Which of the following inferences can be drawn from the above?

  1. After the transaction, the Government and LIC together will be able to block an ordinary resolution of the bank's shareholders.
  2. The Government and LIC will each part with roughly the same number of percentage points of the bank's equity.
  3. The transaction will change the bank's classification from a public sector bank to a private sector bank.
  4. After the transaction, the buyer's stake will exceed the combined residual holdings of the Government and LIC.
  • A. 1, 2 and 4 only
  • B. 2 and 4 only
  • C. 1 and 3 only
  • D. 2, 3 and 4 only

Q3. With reference to the Reserve Bank of India's Prompt Corrective Action (PCA) framework for banks, consider the following statements: Which of the statements given above is/are correct?

  1. It aims to enable supervisory intervention at an appropriate time and to require the bank to take remedial measures to restore its financial health.
  2. Placing a bank under the framework is a step in winding up the bank under the Banking Regulation Act.
  3. Restrictions on distributing dividends are among the actions that follow once a bank breaches a risk threshold.
  • A. 2 and 3 only
  • B. 1, 2 and 3
  • C. 1 and 3 only
  • D. 1 only

Q4. A foreign financial group proposes to acquire a controlling stake in a listed Indian bank that the RBI classifies as a private sector bank. Consider the following statements in this context: Which of the statements given above is/are correct?

  1. The group's suitability as a major shareholder will be examined by the RBI against 'fit and proper' criteria before the acquisition is permitted.
  2. The 20% statutory ceiling on foreign investment applies to this acquisition, because the bank was earlier owned by the Government.
  3. Once the RBI grants approval, the group's fitness and propriety as a shareholder ceases to be subject to further supervisory scrutiny.
  • A. 1 only
  • B. 2 and 3 only
  • C. 1 and 2 only
  • D. 1 and 3 only